Health care development could boost Southern Oregon economy

For decades, Southern Oregon’s economy thrived on timber and wood products, providing steady jobs handed down from one generation to the next.

Yet, logging restrictions coupled with a range of other factors, including tough market conditions through the Great Recession, have taken a significant toll on the industry. And, while some recovery is now taking place, one group, Oregonians for Rural Health, has mobilized to diversify the regional economy by capitalizing on the steady strength of healthcare.

“Oregon’s state economy has made sizable gains post-recession, especially in Portland and other urban areas of the state,” said Wayne Patterson, executive director of the Partnership for Economic Development in Douglas County, which is spearheading Oregonians for Rural Health. “Yet, Southern Oregon’s economy continues to lag behind. The scars of high unemployment and poverty weathered over the years across Southern Oregon run deep. Today, jobs are still tough for many to come by and the future remains rather uncertain. ”

Unemployment across Southern Oregon averaged nearly 16 percent at the height of the Great Recession in 2009. Douglas County was among the hardest hit counties with 18 percent unemployment. By comparison, Oregon’s unemployment rate was 12 percent. It was not until last year that unemployment rates in Southern Oregon fell into single digits. The latest data released by the U.S. Bureau of Labor Statistics puts the average unemployment rate for Southern Oregon counties at 6.7 percent. This compares with the state’s current unemployment rate of 4.8 percent, notably influenced by the Portland area’s unemployment rate of 3.9 percent.

Southern Oregon has historically experienced ups and downs in its regional economy, especially given the highly cyclical and volatile nature of the timber industry. Market conditions, including residential building booms and busts, largely drive production and, consequently, employment and revenue. Adding into the mix of uncertainty is timber supply, particularly following environmental restrictions on logging in federal forests during the 1990s. Since then, limited timber supplies have added challenges to the industry and led to mill layoffs and closures.

Last month, the Bureau of Land Management released a new timber harvest plan for federal forestland in Western Oregon. Both timber executives and county officials issued warnings that it squeezes timber harvests to a point where further downsizing would be inevitable. A rash of continued mill layoffs and shutdowns throughout the region attributed to timber harvest cuts suggests a challenging future ahead for operators and the communities that rely on them.

The vanishing funds from timber industry revenues are expected to lead to cuts in social services provided by local governments. These cuts are likely to be compounded by already declining federal timber payments, which dipped this year to a record low of about $60 million to be split for funding schools, libraries, law enforcement, roads and other services. While congress has continued to reauthorize timber payments for over 15 years, the future of this lifeline remains uncertain.

Investments in mill modernization and automation for many, particularly larger operators have led to year-over-year increases in production per worker. According to a recent report issued by the Oregon Office of Economic Analysis (OEA), the timber industry has regained much of its former output using fewer employees. Back in its heyday during the 1960s and ’70s, the OEA reports the wood products industry in Oregon contributed about 70,000 to 80,000 jobs that paid 30 percent more than the state average. This compares today with about 25,000 to 30,000 jobs that pay the state average.

“Log trucks will, no doubt, still be seen hauling loads up and down the I-5 corridor. What Southern Oregon communities need are long-term solutions that can help diversify our economy,” said Patterson. “New economic drivers are needed that can provide greater stability, in addition to family-wage jobs critical to reversing the region’s high unemployment and poverty levels.”

Patterson added, “That’s why several years ago, community leaders, businesses, economic groups and others began exploring options to diversify and renew the region’s economy. Capitalizing on the recession-proof vitality of health care came to the forefront of options given its strong presence in the region and the growing need for services. What became apparent is that hospitals and providers are struggling to recruit skilled professionals for a variety of positions, including nursing, physical and occupational therapy, radiology and imaging and mental health. That led us to the idea of building a regional allied health medical college that would serve multiple high-demand fields.”

Kelly Morgan, CEO of CHI Mercy Health in Roseburg, has been part of the effort since its start and echoed the growing need for skilled health care professionals.

“Demand for health care has grown in our area, statewide and nationally, and is projected to keep growing,” he said. “More individuals now have health insurance. Plus, our aging population places an even greater demand on services. It is critical for us to maintain and expand services to ensure our residents have access to local, affordable health care.”

Mercy is not alone as confirmed in the Oregon Employment Department’s 2015 Job Vacancy Survey Report released last March. Year over year, Oregon’s health care industry has topped the list of total job vacancies in the state. Rates of difficult-to-fill health care job vacancies are particularly high in rural areas and expected to get worse. The primary reasons for health care job vacancies, as cited by employers surveyed, were low education levels among applicants and the lack of qualified candidates.

Patterson underscored the need for reliable health care in the region from an economic perspective.

“Without adequate health care, we will have a difficult time retaining and attracting businesses to the region,” Patterson said. “Health care is a vital part of the region’s infrastructure just like roads, electricity and water.”

Health care did not suffer losses during the recession, although its growth did slow. The health care industry is relatively insulated from the typical peaks and valleys of business cycles experienced by other industries in good times and bad. This is largely attributable to much of its services being mandatory, rather than discretionary. A broken arm must be mended, whereas buying a new car or house is often put off during tough economic times.

In Oregon, heath care is expanding with the growing population. According to Oregon Employment Department forecasts, healthcare will add about 45,000 new jobs at a 22 percent growth rate through 2022. Professional and business services sector was the only other projected to have a slightly higher growth rate at 23 percent.

“Health care is a viable path forward to strengthen and diversify Southern Oregon’s economy,” said Patterson. “As hospitals and providers have told us and the state data shows, job vacancies already exist in multiple high-demand medical fields. The opportunity is here to link individuals, including youth and young adults, living in the region to those jobs through expanded workforce training. And, we need to ensure communities have access to reliable health care services.”

Note: The next article in this series will examine growing health care demand and provider shortages in Southern Oregon that limit access to care. The article following will then explore Southern Oregon’s growing youth exodus, in addition to workforce training needs.

Kelly Bantle is vice president for Pac/West, a public affairs firm working with Oregonians for Rural Health. She can be reached at bantle@pacwestcom.com.

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